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Does TripAdvisor's Vacation Rental Segment Have The Potential To Become The Next Market Leader?

Though TripAdvisor seems to be troubled by its biggest investment, Instant Booking right now , it seems that the company's other investments are paying off. In fact, we have earlier spoken about how TripAdvisor's non-hotel business might have been undervalued by investors and might give a major boost to TripAdvisor's revenues in the future. TripAdvisor's non-hotel business, including attractions, restaurant reservations, and vacation rentals has the potential to grow by 118% between 2015 to 2018 to amount to a $500 million business . Also, TripAdvisor's vacation rental business has the potential to surpass market leaders such as Expedia's HomeAway and Airbnb.

Currently, TripAdvisor's platform includes 830,000 vacation rental properties across 190 countries which is almost double the properties of that of Priceline. In the vacation rental segment, TripAdvisor has acquired companies like HouseTrip, FlipKey, HolidayLettings, Niumbia, and VacationHomeRentals.com. We expect TripAdvisor's Subscription and Other business's revenues (which are comprised of attraction, restaurant, and vacation rental bookings) to increase from around $400 million in 2016 to over $600 million by the end of our forecast period.

HomeAway is currently the market leader in vacation rental booking with its over 1 million properties. However, TripAdvisor is not far behind and with its frequent acquisitions and with the help of organic and inorganic growth, it might surpass HomeAway's inventories in the future. TripAdvisor's vacation rental segment has other distinct advantages over its competitors:

  1. TripAdvisor is the world's largest travel review website. Currently, the TripAdvisor platform includes over 435 million reviews (50% y-o-y growth in Q3 2016) for 1.9 million accommodations, 4.2 million restaurants, and 730,000 attractions and the platform enjoys 390 million average monthly unique visitors reflecting an 11% y-o-y growth. Hence along with reviews for vacation rentals, a prospective buyer of the vacation rental accommodation can also find reviews of local attractions and restaurants for their vacation destination.
  2. More importantly, once a traveler books TripAdvisor's vacation rental, the platform has the ability to cross-sell the other complementary products such as flights, local attractions, restaurants, etc. TripAdvisor's attraction booking website, Viator, and restaurant booking website, TheFork, are among the largest aggregators in the world. The traveler gets the convenience of booking everything on the same platform after checking out their reviews.
  3. TripAdvisor has the competitive edge over its peers in the area of big data. TripAdvisor's millions of reviews provides it with unique knowledge of the popular trends and consumer behavior across regions when it comes to travel booking. This mine of information can help the company in better catering to the traveler's needs.

Have more questions about TripAdvisor? See the links below.

  • What Is TripAdvisor's Fundamental Value On The Basis Of Its Forecasted 2015 Results?
  • Advertising Vs Subscription: What's TripAdvisor's Revenue and EBITDA Breakdown?
  • How Has TripAdvisor's Revenue And EBITDA Composition Changed Over 2012-2016E?
  • TripAdvisor Year 2015 In Review
  • Where Can TripAdvisor's Growth Come From In The Next 5 Years?
  • What Drove TripAdvisor's Revenue And EBITDA Growth Over The Last Five Years?
  • TripAdvisor Q1 2016 Earnings Preview
  • How Is TripAdvisor Gearing Up For Competition In The Vacation Rental Space?
  • How Can Instant Booking Stir Up The OTA Space And Be A Game Changer For TripAdvisor?
  • TripAdvisor's Expected Revenue And EBITDA Growth For 2016: Trefis Estimate
  • Why Might TripAdvisor Be An Attractive Acquisition Target For Priceline?
  • What Has Been The Immediate Impact Of The Brexit Decision On The Online Travel Companies?
  • How Is TripAdvisor's Non-Hotel Business Expected To Grow?
  • What Might Be The Long-Term Impacts Of Brexit On The Online Travel Agencies?
  • What Is The Significance Of TripAdvisor's Upgraded Flight Search Platform?
  • TripAdvisor's Q2 2016 Earnings Preview
  • TripAdvisor's Q2 2016 Results Remain Subdued But The Company Is Eyeing Long Term Growth
  • Reasons Behind Our 12% Downward Revision Of TripAdvisor's Stock Price
  • How Is TripAdvisor's Top Line Trending?
  • TripAdvisor's Third Quarter 2016 Earnings Preview
  • TripAdvisor's Third Quarter 2016 Remains Dampened As It Keeps Waiting For Instant Booking's Success

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for TripAdvisor

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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